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overseas
This
page considers overseas consumer credit reporting regimes,
including profiles of major credit reporting enterprises.
It covers -
globalisation
Economies of scale, opportunities to leverage expertise
(or merely to buy smaller competitors) and the financial
globalisation highlighted
elsewhere on this site has seen the emergence of a handful
of major businesses that collect and process personal
credit data.
Unlike individual financial institutions they lack a 'high
street presence' and rarely advertise in the electronic
mass media. They are thus not particularly visible to
consumers, although their impact on the lives of individuals
may be substantially greater than that of particular lenders.
It is likely that they will continue to spread and deepen
their global presence.
That is of significance because arguably regulators have
concentrated on the financial institutions rather than
on the entities that increasingly provide the data and
methodologies for
whether those institutions lend to consumers and SMEs.
As one official told us, "it's just data".
North America
In North America the three dominant groups are Experian
(formerly part of TRW and now controlled by UK retailer
GUS), Equifax and TransUnion (under the control of the
Pritzker family, better known for the Hyatt hotel chain).
In 2001 it is estimated that Experian's North American
revenue was over US$1 billion and TransUnion had around
US$200 million. Equifax reported revenue in 2003 of US$1.2
billion, with income of US$200 million. They are trailed
by Innovis and a plethora of minor competitors.
Experian
originated as a data processing unit of US high technology
conglomerate TRW. It was acquired by GUS (the UK retailer
with interests that include Burberry) in 1996 and absorbed
the CCN data services arm of what was then Greater Universal
Stores. A perspective is offered in Davis Dyer's
celebratory TRW: Pioneering Technology and Innovation,
1900-1996 (Boston: Harvard Business School Press
1998). Experian was spun off from GUS in 2006 and has
since expanded aggressively, eg paying US$240m for internet
metrics specialist Hitwise in 2007 and pays £600m for
70% of Brazilian credit reference group Serasa (with 160
million files).
Experian claims to maintain credit information on 205
million consumers and 14 million businesses in the US,
to process 1.4 million consumer transactions per day and
to have classified "more than one seventh of the
world's population into demographic groups for target
marketing".
Equifax
- which charmingly claims that it "enlightens, enables
and empowers consumers to manage and protect their financial
health with services offered online" - traces its
origins to the Retail Credit Company established in Atlanta
in 1899. It became Equifax in 1913. A view of a UK acquisition
is provided by The Growth of Credit Information: A
History of UAPT-Infolink plc (Oxford: Blackwell 1992)
by C. McNeil Greig. Equifax spun off Choicepoint
in 1997.
TransUnion
- described as "world's leading business intelligence
providers" - dates from the 1968 reconstruction of
Union Tank Car Company, a railcar leasing business that
acquired the Credit Bureau of Cook County (CBCC) in 1969
and automated its operations. At the time of acquisition
the CBCC used 3.6 million card files.
Innovis
Data Solutions has leveraged a relationship from 2001
with mortgage insurance groups Fannie Mae and Freddie
Mac, which requie affiliates to report borrowers' payment
histories. Although it currently does not sell consumers'
credit histories to financial institutions and potential
employers, it has gained attention in the development
of mailing lists for current/potential providers of credit
to those borrowers and for its role in underpinning junk
mail from non-finacial institutions. Its New Movers service
for example provides a monthly list of people who have
reported a change of address. The Innovis FailSafe database
supplies names of consumers who are late in paying or
or who have been late in the past.
Innovis traces its history to US credit reporting businesses
active in the 1930s and 1950s, which exchanged information
from 1970 onwards through ACB Services under the umbrella
of Associated Credit Bureaus (ACB). ACB Services
was renamed Consumers Credit Associates (CCA) in 1989,
renamed Innovis Data Solutions in 1997 after acquisition
by First Data Corporation and subsequently sold to CBC
Companies in 1999. CBC is an information services group
that encompasses processing consumer loan and mortgages,
apartment rental applications and personnel evaluation.
European regimes
A perspective on the US, Australian and New Zealand regimes
is provided by examination of arrangements in Europe.
As noted earlier in this profile, the EU Directives provide
umbrella coverage (particularly for cross-border data
collection and transfer) but there is variation between
national regimes because most credit services have traditionally
had a national base.
Sweden and Denmark
Sweden features US-style credit bureaus with comprehensive
registries of white and black data. In the case of UC
AB, the dominant player, that includes a range of financial
data (including business activity information, tax information
and information from property registers), demographic
information and credit reporting information.
Swedish law specifies that data can only be released for
particular purposes, with the individual receiving a copy
of the report and information about who received that
report, but aggregate data is being used extensively in
generic prediction systems.
Registry data is available to financial institutions,
retailers, government agencies, real estate services (eg
regarding leasing of apartments) and utility providers.
Inclusion of black data is dependent on government recognition
of the debt. Unpaid debts remain in the register for as
long as the creditor attempts recovery; if the creditor
abandons recovery the data is held for ten years. (When
a debt is recovered the data remains in the register until
the end of the current year plus three extra years).
The Danish regime centres on a single
registry - operated by RKI Kredit Information A/S - that
integrates data from financial institutions, utility operators
and retailers with government data from the Danish Official
Gazette (including bankruptcy notices and court ordered
sales).
The registry is one of the most restricted in Europe.
In accord with the Danish Data Protection Act information
in the registry is deleted after five years or when the
individual clears the debt. Data subjects are formally
alerted by the registry operator when information is added;
that alert enables the subject to initiate appeal proceedings
or clear the debt and thereby expunge the data.
UK and Eire
The UK industry is similar to that in
the US, overlaid by the EU Directives and UK financial
services legislation. There is no public registry and
the market is dominated by the three commercial bureaus:
Equifax, Experian (UK-owned) and TransUnion. Data in their
registries is drawn from financial institutions (in particular
the banks, the dominant credit card providers), retailers,
utility providers. It is also drawn from a small range
of public sources, notably the electoral roll (eg for
verification of identity and tracking of data subjects).
The registries offer positive and negative information,
distributed on a reciprocal basis. It is estimated that
negative and positive information in the two largest registries
covers over 80% of the adult population.
Ireland has a contrasting regime, centred
on a registry maintained by the Irish Credit Bureau (ICB),
controlled by some 30 financial institutions (primarily
banks and building societies). The ICB was formed in 1965
by the Irish Finance Houses Association and draws on data
provided by its members, including the outstanding balance
on home, car and other loans, arrears and repayment histories.
Consistent with the weakness of Eire's privacy legislation,
the registry maintains data for five years after the conclusion
of each financial agreement.
The 1984 Data Protection Act specifies that data
must only be maintained regarding those data subjects
who agree to inclusion but, as in Australia, such protection
appears of dubious value since most credit agreements
feature a consent provision (no agreement means no credit).
Data subjects can obtain a copy of their personal credit
information from the registry, include a statement where
data is incomplete or "irrelevant", obtain the
correction of faulty data and in particular circumstances
flag that data is irrelevant for the purpose for which
they are kept. Registry members are required when requested
by a data subject to provide information about any credit
reference agency involved in assessment of a loan application.
That provision covers ICB members only and thus excludes
'fringe' entities.
Germany and Austria
Germany has a mixed public-private sector regime. The
dominant player is the Schutzgemeinschaft für allgemeine
Kreditsicherung (Schufa),
a non-profit entity owned by banks and retailers. Its
databases, which date from before 1927, cover an estimated
55 million people. Schufa's information is black and white,
with consent of the data subject required for release
of positive data.
German law identifies the right of data subjects to be
notified of listing and to correct and restrict/delete
incorrect data. Organisations providing negative information
can only access the same type of data. Access charges
reflect the reciprocity model, with pricing dependent
on the data provided and requested. The major public registry
- established in 1934 - is operated by the Bundesbank.
Across the border in Austria the KSV
private credit reference and debt collection bureau, tracing
its origins to 1870, is owned by financial institutions.
It serves as a non-profit clearinghouse for the exchange
of negative and positive credit information between banking,
finance, insurance and leasing enterprises. (Utilities
and retail enterprises participate only in exchange of
negative information.) Data is held in the register for
three years if the debt has been recovered, with maximum
retention of 30 years for unrecovered debts. KSV has been
expanding into Central and Eastern Europe.
Belgium, the Netherlands and France
The Belgian regime is similar to that
of Germany, with a public registry operated by the National
Bank of Belgium (NBB) since 1987 and a private registry
operated by the Union Professionnelle du Credit (UPC)
- the national association of consumer credit companies.
Finance providers are required to check the public registry
prior to granting of credit, with data subjects being
informed of any negative entry.
The UPC registry, dating from the 1930s, involves over
60 financial institutions of UPC. It encompasses an estimated
96% of the consumer credit sector, 78% of professional/SME
leasing and 90% of the housing credit sector. Belgian
law prohibits use of the registries for any purposes beyond
assessment of creditworthiness, credit management and
authentication of financial instruments. Negative data
is maintained for between one and ten years.
The Bureau Krediet Registratie (BKR), dating from 1965,
is the dominant player in the Netherlands,
covering around 6.5 million people. It draws on data provided
by financial institutions and utility operators. Demographic
data is collected only for identification purposes. The
registry emphasises positive data, including the nature
of lending or other transaction and the start and end
dates.
Data on mortgage borrowing is currently restricted to
instalments due for more than 120 days. Data regarding
unpaid debts is retained for an unlimited period; data
on debts that have been settled is retained for five years
(in contrast to the Danish regime) to facilitate identification
of individuals who systematically delay payment. Data
subjects can access their records for a small fee and
identify discrepancies.
In France the Banque de France operates
a national public registry of negative data, reflecting
traditional concerns about financial secrecy and low uptake
of consumer lending throughout much of the past century.
Italy, Spain and Portugal
Italy has two private sector credit bureaus:
CRIF and Consorzio per la tutela del credito (CTC). CRIF,
the dominant player, is a for-profit entity that collects
positive and negative data for all types of loans - primarily
those by banks. In principle there is no minimum threshold,
unlike some of the northern European regimes. Its databases
reportedly cover 21 million Italians, encompassing demographic
information, tax and asset information and loan details.
CTC is a non-profit entity, owned by credit providers
(particular car finance) and operating a negative registry
that reportedly covers 90% of the Italian market. Its
members have unrestricted access to the registry.
Spain
has a mixed regime. A public central registry is managed
by the Bank of Spain. The registry operates on a positive
basis, with mandatory data contribution by financial institutions.
It has a high threshold, excluding most consumer credit
loans and arguably serving as a tool for central monitoring
of the stability of lending bodies.
The dominant private sector player since 1994 is a joint
venture of Equifax and the national federation of finance
companies (ASNEF). Data is provided by financial institutions
and some utility companies.
In Portugal the dominant credit bureau
is a joint venture between Equifax and the national association
of credit providers (ASFAC). The national Banking Secrecy
Act prohibits the sharing of data by financial and non-financial
enterprises and the registry - which features positive
and negative data - thus currently does not receive information
direct from retailers or utility providers. As with Spain,
the Bank of Portugal operates a registry oriented towards
supervision of lending institutions.
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